Hortonworks' (HDP) CEO Rob Bearden on Q2 2016 Results - Earnings Call Transcript

| About: Hortonworks (HDP)

Start Time: 16:30

End Time: 17:10

Hortonworks, Inc. (NASDAQ:HDP)

Q2 2016 Earnings Conference Call

August 04, 2016, 16:30 PM ET

Executives

Rob Bearden - CEO

Scott Davidson - CFO

Shaun Connolly - VP, Corporate Strategy

Brian Marshall - VP, Corporate Development

Analysts

Abhey Lamba - Mizuho Securities

Jesse Hulsing - Goldman Sachs

Brent Bracelin - Pacific Crest

Raimo Lenschow - Barclays Capital

Greg McDowell - JMP Securities

John Rizzuto - SunTrust Robinson Humphrey

Tim Klasell - Northland Securities, Inc.

Operator

Good afternoon, and welcome to the Hortonworks, Inc. Second Quarter 2016 Earnings Question-and-Answer Conference Call. Please note that today's call is being recorded and a webcast is also being broadcast live over the Internet on the Investor Relations section of Hortonworks corporate Web site. A replay of today's call will be available on our Web site approximately two hours after the conclusion of this call.

This broadcast is the property of Hortonworks, Inc. Any redistribution, retransmission, or rebroadcast of this call in any form without the expressed written consent of the company is strictly prohibited.

I would now like to turn the call over to Brian Marshall, Vice President, Corporate Development for Hortonworks, Inc. Go ahead, Mr. Marshall.

Brian Marshall

Great. Thanks, Chuck. Good afternoon, and welcome to Hortonworks' Q2 2016 earnings question-and-answer call. Today, we'll discuss the results announced in our press release and prepared remarks issued after market closed. With me is Rob Bearden, Chairman and CEO; Scott Davidson, CFO; and Shaun Connolly, VP of Corporate Strategy.

During the call, we’ll make forward-looking statements regarding future events and views about the future financial performance of the company. These statements are subject to material risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These risks are described in our press release, and are more fully detailed under caption risk factors in our Form 10-K and other periodic filings with the SEC.

We will also present both GAAP and non-GAAP financial measures. Non-GAAP measures should not be considered in isolation from and substitute for or superior to our GAAP results. We encourage you to consider all measures when analyzing Hortonworks' performance. A reconciliation of GAAP to non-GAAP measures is included in today's press release.

In addition, please note that any forward-looking statements that we make toady are based on assumptions that we believe to be reasonable as of this date. We undertake no obligation to update these statements as a result of new information or future events.

So with that said, I’ll now turn the call back over to Chuck to start the 30-minute question-and-answer session.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions]. Our first question comes from Abhey Lamba with Mizuho Securities. Your line is open. Go ahead, please.

Abhey Lamba

Thank you. Rob or Scott, results were clearly below your guidance and where you thought the quarter would be across almost all metrics. So maybe you can just talk about the high level factors that really impacted the quarter? And Scott if you can clarify this operating billings versus gross billings and how you guided earlier and the changes in that, that would be helpful?

Rob Bearden

Yes, absolutely. Let me start with the first part of your question at the high level to give you some perspective there and then Scott can give you a little more granularities to detail on the second part of the question. Let me start off by saying what I’m very proud of the team in the quarter is that we actually grew our support subscription revenue by 72% year-over-year and we clearly reduced the operating cash flow burn by over 60% in the last 90 days to $14 million in the quarter versus the $36 million in Q1. The reality is that at the end of the day we didn’t outperform our billings expectations. And as I’ve already unpack that, the root cause is categorized and there were two primary areas. The first relates to an imbalance that we’ve had and the mix between non-revenue versus revenue generating individuals. And the second is – that’s led to too thin a territory coverage and we want to continue to improve on our deal inspection throughout the quarter. And so we have already taken a couple of actions. The first adjustment that I’ve made is that we’ve rebalanced some of the non-revenue generating heads early in Q3 in order to shift those into quota-carrying reps. And what’s that going to do is significantly improve both account coverage and our ACV generation. And the second step is that sales now reports directly to me. And I’ll let Scott touch on the second side of the question.

Scott Davidson

Abhey, if I understand your question correctly, it was sort of the difference between sort of operating billings and some of the historical billings calculations as we talked about it. So from an operating billings perspective from a definition perspective, that is the value of all the invoices that we send to our customers for the period. So we invoiced out during the period 62.2 million as we talked about. If we go back and we look at historical billings as we provided from a perspective of guidance, that number from a guidance perspective was 62.5. The way that that was calculated historically was GAAP revenue plus the change in deferred, and that number was 62.5 from a guidance perspective. This quarter we had a reserve that we talked about that was 5.9 million reserve against AR and the other side of that entry is on deferred revenue. So if you want to do apples-to-apples with the reserve, the 62.5 which was the guidance historically was 56.3. And if you look at the actual invoicing and what we sent out, it was 62.6, so that’s sort of net at the reserve under the new calculation.

Abhey Lamba

Got it. And going back to your commentary about the sales now reports to you is going to be helpful clearly. Can you talk a little bit about Herb’s departure? What was the reasons behind that? And also if you can – that probably goes back to Scott. On the billing side you’re calling for a sequential significant jump in Q3. So what is coming from renewals versus new billings and what gives you comfort in that guidance?

Rob Bearden

I’ll cover Herb first and then Scott can pick it back up. Herb has been a terrific partner of mine for the last four years here in building this company and building the terrific team and has been just a pleasure to work with every day. I’m very sorry to see him go. But Herb is very focused and committed to becoming a CEO and he’s emerged into the skill set to be and prepared to do that. And this is a good transition point for him to go take a period of time off. He’s going to be in transition mode here for a bit longer. And then he will start his search for a CEO job and I’ll tell you he’s ready for it, and very proud of the team he’s built and the quality of the business that he’s run.

Scott Davidson

On the second part, on the guidance perspective, Abhey, we’ve never broken out sort of what was the renewal versus new piece. A rough cut, I’d say within Q3 it’s about a third of the subscription dollars that are available, just high level. I’ll tell you that if we look at just the impact of renewals in the Q2 number versus Q2 of the prior period, renewals were up 400%. It’s coming off of a lower base for sure but we’ve seen good traction on the renewal side. And the renewals become a larger proportion of the subscription number as we grow and that’s also part of one of the driving factors to part of what’s driving the EBITDA Q4 target that we’re looking at.

Abhey Lamba

Got it. Thank you.

Rob Bearden

Sure. Thank you.

Operator

Thank you. Our next question comes from Jesse Hulsing with Goldman Sachs. Your line is open. Go ahead, please.

Jesse Hulsing

Thanks for taking my question. I’ll just start on the demand side. Can you give us an idea of I guess the trends and expansions versus new customer adds? And was there weakness in any particular one of those kind of new billings drivers?

Scott Davidson

Jesse, it’s Scott. On new deals they actually increased sequentially and year-over-year to about 100,000 in that range. And the existing deal sizes are under 200,000. So we’ve seen some of the expansion on the newer deal sizes there comparatively.

Jesse Hulsing

Okay. And that’s from an ASP perspective but I’m curious from just a business momentum point of view, expansion new ACV versus new business new ACV, was there one that was dramatically weaker than expected, or were they both kind of below your expectations?

Rob Bearden

One of the dynamics in the quarter was that we saw an increase in multiyear. And the good news behind that is that it’s a demonstration that the land and expand model is truly playing out, because it tended to be in the expand bucket, if you will, several of those transactions and actually more than anticipated were multiyear transactions because the customers viewed this as very transformational under their digital platforms, very transformational and enabling the next generation data architectures. And they wanted to have a long-term agreement with us. The challenge that comes with that is it obviously masks the ACV number one and number two as a longer tail obviously on the revenue recognition. As far as the ACV goes we did underperform there and that is unpacked. It’s principally because of the too thin of coverage, which led to one of the changes that I mentioned in the earlier question where we’re moving some non-revenue generating individuals and transitioning that to revenue generating individuals to improve our coverage and that should result – and I’m very confident that it will result in better ACV.

Jesse Hulsing

Okay. And Scott, obviously billings are a big driver of cash flow for Hortonworks. I’m wondering how you’re thinking about the path to cash flow breakeven? And should we expect to pull back in operating expenses as your billings have slowed down or do you expect reacceleration in billings to get you to cash flow breakeven?

Scott Davidson

So there’s sort of two moving parts there. If you take the guidance for Q3 billings and then fall for Q4, you can see and we expect sort of increased billings in both Q3 and Q4 over Q2, so an increase first part of it on the billings side. And then secondarily on the cost side of the equation, Rob talked a little bit about the rebalancing of the hedge from non-revenue producing to producing. So that process has already been partially completed. And there’s other costs containment structures in place right now. So we’re not looking to increase anything on the cost side right now unless it’s got a revenue component matched up with it.

Jesse Hulsing

Got it. Thank you, guys.

Operator

Thank you. Our next question comes from the line of Brent Bracelin with Pacific Crest. Your line is open. Go ahead, please.

Brent Bracelin

Great. Thanks for taking the questions here. I guess just back to the billings shortfall here in the quarter. It looks like the last two quarters you got a benefit from an increase in multiyear transactions if I just look at the change in long-term deferred. And so I guess my question here is with that benefit what’s happening relative to kind of short-term deals? Has there been a change in the competitive environment? Is there larger deals that are tougher to close or do you think this is an internal issue that’s more of a company specific issue? Just trying to understand what has really changed relative to your ability to kind of close new business. And it looks like over the last couple of quarters, it looks like it’s been a little more challenging.

Rob Bearden

Yes, we’ve got a go-forward basis of very intent focus on account coverage and driving ACV and driving more of the transactional. And that’s going to come through the improved coverage models and I’m very comfortable that we’re on the right track for that.

Brent Bracelin

And if you don’t see response quickly i.e. in the next quarter, will you consider taking additional costs containment actions? Just trying to understand, you’re clearly on a pretty aggressive path to EBITDA kind of breakeven here, but that’s going to require a pretty quick turn relative to those kind of rebalancing of quota-carrying sales reps. So, as you think about that path would you consider additional cost containment actions here to get to cash flow kind of breakeven?

Rob Bearden

I’ll start with we’ve very committed to the guidance we’ve given on the billings number and to obtaining adjusted EBITDA breakeven in Q4, I’ll start there and make sure I’m – and I’m very comfortable with where we are in the quarter to execute to that guidance and on track with the expense rebalancing that we’ve done in order to get there. And we will continue to stay very, very focused on the cost containment program that we have in place to ensure that we execute on the billings and the expense side of the models and the guidance we’ve given.

Brent Bracelin

Okay, fair enough. Last question for me is really around, can you just remind us how long it takes for a quota-carrying rep to get to full productivity?

Rob Bearden

So not all quota-carrying reps are the same but I think from a rule of thumb, somewhere between seven to nine months.

Brent Bracelin

Okay. Thank you.

Rob Bearden

Brent, just to be really clear that’s fully ramped; there’s contributions. They don’t go from 0% to 100%, it’s sort of a gradual process but fully ramped at the end of that.

Operator

Thank you. Our next question comes from Raimo Lenschow with Barclays. Your line is open. Go ahead, please.

Raimo Lenschow

Thanks for taking my question. Can I stay on the coverage, Rob, that you kind of talked about earlier. So if you’re too thinly covered and you have too many guys that are not on quota, how can you convert these guys into quota, because usually a sales guy is a sales guy and a sales engineer or sales support guy is a sales support guy. Does that not require different people, like can you talk me through that logic there? Thank you.

Rob Bearden

Yes, I’m sorry if I wasn’t clear and thanks for pointing that out by the way. We did not move non-revenue producing people and then just suddenly give them a quota and [indiscernible]. We transitioned some individuals out of the company and have replaced them with the traditional sales skill sets replacing them.

Raimo Lenschow

Okay, that makes sense. So in a way – sorry, go ahead.

Rob Bearden

I’m sorry. Go ahead.

Raimo Lenschow

So in the way I have to think about it that you kind of – your team has built like an organization that was kind of heavily helping sales guys but you just didn’t have enough sales guys and so you couldn’t make the numbers basically. Is that the right way to think about it?

Rob Bearden

That’s a fair characterization. And we just did not have the right level of coverage, correct.

Raimo Lenschow

Okay, perfect. And in terms of the underlying market, has there been any – if you think about what you see in the field how pipeline builds, how leads kind of go through the pipeline, has there been any change in terms of how that whole Hadoop theme is playing out for you guys and for the rest of this space, or is it just really if you fix it, it should be fixable?

Rob Bearden

We’re going to see the improvements and we’ll see the adjustments and you’ll see those in current quarter and very, very comfortable with that. The market is very strong. When we look at the size of the market of the Hadoop or the big data market generally being $50 billion and the data-in-motion market which is where our Hortonworks data flow platform that we’ve recently brought into production, that’s a $1.7 trillion market. So market opportunity is very significant. It’s very early days. We’ve just begun to penetrate these markets and we’re seeing that we’re absolutely bringing the solutions and the platform and the architectural capability and the solution capacity that the enterprise is absolutely trying to enable, and they are moving in that direction and we’re helping them actually accelerate it. But it’s very big transformation projects that they’re enabling that are very strategic to their business models, which generates a very large market. And sometimes the sales cycles are a bit longer than more simplistic platforms. And so we’re balancing how we sell into that environment into the adjustments that we’ve made in current quarter.

Raimo Lenschow

And then one for Scott. What’s the – DRs are up this quarter at 5.9 million. What’s that for?

Scott Davidson

I’m sorry. Can you say that again?

Raimo Lenschow

Did I read that correctly? We had a 5.9 million DR reserve this quarter.

Scott Davidson

Yes, it was an accounts receivable reserve. Back in Q1 you may recall that we talked about a collection that we had on a prior deal. So we reserve 5.9 million against accounts receivable balance and also against deferred revenue; 5.9 million, which is the offsetting entry based on a deal that was previously done. There’s no revenue that’s been taken on that deal but we’ve got a collection issue with it.

Raimo Lenschow

Okay, perfect. Thank you.

Operator

Thank you. Our next question comes from the line of Greg McDowell with JMP Securities. Your line is open.

Greg McDowell

Great. Thank you very much. Just one question and I want to bring it high level for a minute, because I think the results in the guidance are going to give some ammunition to the skeptics out there. So I was just hoping we can maybe thread the needle a little bit on the challenges and the challenges, how much of it is sort of company specific execution issues versus maybe business model challenges versus maybe just general market adoption challenges, and maybe the TAM isn’t as big as some of us originally thought it was? So I was just hoping that we could sort of thread when the skeptics come out tomorrow and we try to thread the needle on this, how much is it company specific versus business model versus market adoption? Thanks.

Rob Bearden

We’re clearly seeing that the market is significant and we’re clearly seeing the market accelerate from adopting the use cases that Hadoop enables them to bring inside and to the enterprise that they’ve never been able to do before, and they’re clearly in the phase of adopting Hadoop to bring and consolidate their not only traditional but the new period on data sources. And we are absolutely solidly convinced no change whatsoever in this shift to a modern day architecture powered by Hadoop with great certainty we’re seeing that. If you look at in the transcript that we provided many of the customer examples in the quarter; I’d encourage you to look at that and just see the adoption and the solution and the value that’s being driven by Hadoop.

And it’s gone from an experimental or grass root evaluation to truly becoming and moving into mainstream enabling a modern day to architecture. As far as the model goes there’s sort of two pieces to that. I’ll touch on the first part. Our open source model is actually one of the root cause reasons why we are selected many, many times and why our ecosystem has become so broad and powerful. And we’re beginning to see that pull through that comes from the ecosystem. The industry and the enterprises very much like the kind of innovation that happens in the platform, the transparency of the open source model and how architecturally we’ve approached it and what our connected data platform models enabled them to create value with the solution. So I’m absolutely convinced and extraordinarily comfortable that the open source model works.

Let me hit on the company piece and then Scott can touch on the financial side of the model. Just to expand on the model one more time. That continues to expand our overall addressable market including the cloud platforms. And that is actually additional market opportunity for us and it actually gives us incremental coverage. And we’ve made a couple of great announcements there and that’s opened up a number of doors. As far as the last piece of the question on execution, clearly we’re disappointed that we did not over-perform on the billings. And we’re better than that and we have taken two actions that I’ve outlined; rebalancing the non-revenue generating personnel and we’re replacing that going forward with revenue generating personnel and have the right balance, the right coverage and it will generate a better ACV. And we want to make sure that we are continuing to drive a deeper inspection throughout the quarter on our transactions and just tighten up our focus and ensure we do that. I’m going to have sales report to me indefinitely.

Greg McDowell

Great. Thank you.

Rob Bearden

Scott, do you want to take on the financial?

Scott Davidson

Yes. Greg, I’ll just add to that from a financial perspective, a couple of data points from an ammunition perspective I guess which is going to be helpful to you. If we look at Q2 support subscription revenue from a leverage perspective, grew 72%; OpEx growth was 29%, a second quarter in a row where we’ve had that sort of spread. The renewal dollars, which are critical to the model, up 400%. And so we clearly all realize it takes time to build a subscription revenue stream but we’re seeing these points of leverage as critical. And then I would say, one of the very important aspects this quarter is the operating cash flow number this quarter was negative 14 versus Q1 was negative 36. So that 60% decrease in operating cash flow burn is a critical aspect from a point of leverage is what we’re looking for going forward, but all these support the model from where we sit today.

Greg McDowell

Thank you.

Operator

Thank you. Our next question comes from Derrick Wood with Cowen and Company. Your line is open. Go ahead, please.

Derrick Wood

Thanks. Maybe a follow up on Greg’s question around what’s happening in the landscape and I want to hit on the competitive environment and more so around what the cloud guys are doing; AWS, Google, obviously Microsoft and I know you have partnerships with all those guys but some of them are coming out with their own offerings. Do you see them on the margin becoming more competitive or contending more in terms of going after wallet share?

Shaun Connolly

So this is Shaun Connolly, I’ll cover the cloud topic and then we hit some of the other topics. So from a cloud perspective and I think it was a theme at Hadoop Summit in June in San Jose where basically the major players were either on stage and/or demonstrating solutions in that space. We’ve got partnering relationships from a business and/or technical perspective that sort of matter in that space. From a business perspective, it extends our enterprise customers architectures and it extends our coverage model frankly with additional workloads both ephemeral as well as long running. They were more in the cloud that opened up that new opportunity. If you look in our space, many of our customers have a higher approach to their ways of connecting your data. And so we have solutions across that gamut. In particular, we’re in the market today with Azure, HDInsight. We power that solution. At Summit, we demonstrated the work that we’re doing around AWS and we even saw Google demonstrating some of their capabilities on stage at Hadoop Summit. So there’s definitely interest there. From our perspective, there’s additional workloads. And from an enterprise class capabilities of security and governance and consistent enterprise experience, I think we’re pretty well positioned to sort of monetize both sides of that. So as it ramps up, again, I view it as additional opportunity and extending our coverage model frankly for much more pay-as-you-go booted up quickly in use cases.

Derrick Wood

So no comment about them competitively? They have some of their own tools that they offer, but you don’t see that changing?

Shaun Connolly

No. Each one of those players sort of has some base offerings. We have our own offerings in that space. I think we target particularly a lot of the enterprise class capabilities and right now that’s an actively growing opportunity. So it’s a bit greenfield open from our perspective. So we see less competition there and it’s more sort of a growing opportunity frankly.

Derrick Wood

Okay. And then one for Scott. I want to get more clarity around why multiyear payment terms would impact revenue recognition?

Scott Davidson

It’s not payment terms, they’re just multiyear deals. So it’s just a way that a typical deal would get recognized over 12 months and that revenue would only get recognized in one year versus let’s say a two or a three year deal for you would take it for a 24 or 36 month. It changes the timing of the trajectory of that revenue stream. It just stretches out longer.

Derrick Wood

Okay. And then lastly on – it sounds like you’ve made some workforce cuts and then you backfilled with some new – in terms of the run rate for CapEx going forward, should we see that change much from what you saw in Q2?

Scott Davidson

Yes, so CapEx should go down sequentially from Q2 down to in the 2, 2.5 range. We had some build out of our facility in Ireland, so the CapEx was around 4, 4.5. We should see roughly half that. In terms of OpEx, you’re right. We sort of moved heads, as we talked about fixed amount and we’ll be adding revenue producing heads in there on the OpEx side.

Derrick Wood

Okay. Thanks.

Operator

Thank you. Our next question comes from John Rizzuto with SunTrust. Your line is open. Go ahead, please.

John Rizzuto

Thank you. Rob or Scott, it feels like there was more than just have to go out and hire when we can contrast the momentum coming out of the first quarter into the second quarter, it feels like this was – not that we were blind sighted that it feels like you were blind sighted by this. And it feels like it takes a little bit more. When you went in and you start to say, what’s going on here? We have this growth trajectory that it’s a real stutter-step, why isn’t there more that needs to be done and there’s not a bigger restructuring coming, there’s a realignment of sales regions, sales management, executives down to middle management. Why is this just, okay, we need to go out and hire a few more producing or enterprise level sales guys and that will take care of everything? It doesn’t feel it was – it feels a little bit more severe than that and a little bit more far reaching.

Rob Bearden

There’s no doubt, we much tighten up and have substantially tightened up our process of deal management, and have been very focused through the quarter on deal management at a very granular level. And that’s where the improve our inspection comment is being driven from, right, and that’s going to start with them reporting to me. And I’m very comfortable with our leadership that’s in place all the way down to the first-line managers and everything in between. We do need and are focused on continuing to just tighten up our process of execution.

Scott Davidson

John, I hear what you’re saying but from a prospective, we were 0.5% of 1% off of the billings guidance number we gave you. And I think what you’re talking about in terms of restructuring and some of those things, that portends either a view that would be that either the market’s not there or the model’s not there or something a lot more dramatic. That would be somewhat of a disconnect in my view versus a quarter that’s 0.5% off.

John Rizzuto

Okay, it maybe just feels that way but that’s right, Scott. Just really and looking for I guess something to realize that it wasn’t as bad as it might be perceived. You didn’t have any prepared comments --

Rob Bearden

Go ahead, please. I’m sorry.

John Rizzuto

That’s okay. You didn’t have any prepared comments today, so there’s a lot of metrics that you would normally share with us, do you have them? We’re not going to go through the list but some of the deal sizes, talking about renewals, new customers, et cetera?

Scott Davidson

So some of that has been in real high level sort of deal sizes. New deal sizes I said were about 100,000, up sequentially and annually. Existing deals to customers are slightly under 200,000. We agreed about two quarters ago that we would provide milestone data points in terms of when we got to big chunks of sort of customer deltas and so the next one would be somewhere north of 1,000, so we didn’t provide any data on the customer side. And I did touch on the renewals that were up Q2 over Q2 400%.

John Rizzuto

Okay, all right. And did you have any deals over $1 million this quarter?

Scott Davidson

Six.

John Rizzuto

Okay, all right. Thank you.

Operator

Thank you. Our next question comes from the line of Tim Klasell with Northland Securities. Your line is open. Go ahead, please.

Tim Klasell

Yes. Just a quick question on – Rob, you’re taking over sales and you’ve had that position in the past. Are there particular areas where you want to build out, maybe geos or something like that you could share with us what you think, maybe you’ve underinvest it?

Rob Bearden

That is just general coverage. We’re just so thinly covered we just have to have better presence and coverage and that’s going to result in better and stronger ACV, and that will work very well on our model and our sales methodology and process. And that’s clearly in the Americas and across the Americas where we’ve been super thin is on the international side and particular through EMEA and having very specific additional focus throughout EMEA represents a great opportunity for us. And we’ve just not been present in many, many places and we need to be there. And we’ve demonstrated that when we do have presence, we absolutely monetize and convert --

Tim Klasell

Okay, great.

Rob Bearden

…those opportunities readily. We’ve got great execution, very comfortable with the leadership team, very comfortable with the methodology; just not enough coverage and we’ve got to get better in the coverage because it will convert to ACV.

Tim Klasell

Okay, great. And then on the competitive landscape, have either of your major competitors taken advantage of that lack of coverage that you could be aware of or have they changed pricing maybe even or something where things maybe got a little bit tougher in this last quarter?

Rob Bearden

Yes, our win rate has been tremendous, high to low 90 percentile when we’re head to head in competition. The thing that always becomes concerning is if you’re not there, is there an encumbered ability to win business and you’re not engaged in it and that’s where when we are present, we have an incredibly high win rate against our competitors.

Tim Klasell

Okay, great. And then one quick one for Scott. That 2 million, 2.5 million in CapEx for Q3, is that what we should sort of be modeling sort of going forward? Is that sort of a normalized run rate obviously growing as the company grows, but is that a good base point to start from?

Scott Davidson

Yes, Tim, that’s right.

Tim Klasell

Okay, great. Thank you.

Rob Bearden

Guys, thanks so much for dialing in. We look forward to having conversations with you going forward. Have a good day.

Scott Davidson

Thank you, guys.

Shaun Connolly

Thanks.

Operator

Ladies and gentlemen, thank you for your participation in today’s conference. This concludes the program. You may now disconnect. Everyone, have a good day.

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